France cut its forecast for growth this year in half, to just 0.5%, after six months of flatlining. It is less exposed to the Ukraine crisis but investment is being held back by a lack of progress in reforming its economy.

The escalation in tension, and its impact on the Russian economy, could mean more pain for European exporters and risks tipping the region back into recession.

"The fear is that the economy is heading for recession once again, not helped by events in Ukraine and the potential for further sanctions to negatively impact in the current quarter," wrote Simon Smith, chief economist at FxPro.

Stalled growth also threatens to push prices lower in a region already battling to avoid the threat of deflation.

Data published Thursday showed inflation of just 0.4% across the eurozone. Prices are falling, or barely rising, in nearly half the region's 18 members.

The European Central Bank reiterated last week that it could launch a Fed-style program of quantitative easing, in the event that the outlook sours further.

It cut its main interest rate to a record low in June, and its deposit rate from zero into negative territory -- the first move of its kind by a major central bank.

That means the ECB is now charging banks for deposits they stash with the central bank. In theory, that will provide an incentive to lend the money to firms and consumers instead. It has also announced a series of steps to pump more cheap money into the eurozone, including new long-term loans to banks.